The Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) often conflicts with the terms of construction contracts, leading to outcomes that may differ significantly from what the parties originally agreed to.

Even after 25 years, the Act can still confuse, particularly around seemingly simple concepts such as the running of time, and when a document is taken (or deemed) to be received.

In a recent decision from the NSW Court of Appeal¹, the Court has clarified the enforceability of so-called ’deeming clauses’ for the timing of receipt of documents commonly found in construction contracts which have major implications for the timing and validity of payment claims under the Act.

Background: payment claims and deeming clauses

Section 14(4) of the Act requires a respondent to provide a payment schedule within the timeframe stipulated in the contract or within 10 business days after the payment claim is served, whichever is shorter.

The dispute arose in this case when Sharvain Facades submitted a payment claim for AU$3,278,000 to Roberts Co at 7:18pm on Friday, 28 February 2025, via the online Payapps system. The relevant contract contained a clause stating that any notice sent after 5:00pm would be ‘deemed’ to have been received at 9:00am the following business day. Roberts Co provided its payment schedule on 17 March 2025. This would be within 10 business days if the 5:00pm ‘deeming’ clause applied, but outside time if service was deemed to occur immediately on 28 February 2025.

At first instance, Stevenson J held that the deeming clause was void under section 34 of the Act by changing the meaning of ’business day’. His Honour confirmed that ’service’ under the Act occurs when the claim is capable of being retrieved electronically, even outside business hours.

Roberts Co appealed and the NSW Court of Appeal was required to consider whether the 10 day statutory time period for service of payment schedules under section 14(4) of the Act can be extended by the operation of the deeming provision in the contract, including whether the reference to business days was in fact a reference to business hours within business days.

Court of Appeal decision

The NSW Court of Appeal rejected this contention from Roberts Co and unanimously found that the payment claim was properly served on the evening of 28 February 2025 when it became retrievable electronically. The Court held, dismissing the appeal with costs:

• Service of a valid payment claim under the Act occurs when the claimant sends the claim so it becomes ’capable of being retrieved’ by the respondent, regardless of business hours.² The electronic transmission of the payment claim via Payapps at 7:18pm on 28 February 2025 constituted valid service.
• The statutory timeframe in section 14(4) of the Act ‘can be shortened but not lengthened’ by contract, and the 10 business day timeframe begins from the actual time of service.³
• The term ‘business day’ as defined in section 4 of the Act includes all hours in that day (excluding weekends and public holidays), and service can validly occur outside traditional business hours.⁴

Implications for construction contracts

• Deeming clauses that attempt to delay ‘receipt’ or ‘service’ of notices/documents that extend beyond the Act’s provisions, including payment claims under the Act, are ineffective for the purposes of the Act. The actual time of service is the time the claim is capable of being received or retrieved, regardless of contract terms.
• Parties must calculate deadlines under the Act by reference to actual service, not when a contract says service should be ‘deemed’ to occur.

Takeaways

The decision clarifies that the statutory time to respond to a payment claim runs from the moment it becomes capable of retrieval, regardless of any contractually imposed ‘deeming’ clauses purporting to set later service times. Such ‘deeming clauses’ are therefore ineffective when calculating the strict timelines stipulated in the Act. This is consistent with the overarching intention of the Act to ensure timely resolution of construction disputes without contractually imposed delays.

¹ Roberts Co (NSW) Pty Ltd v Sharvain Facades Pty Ltd (Administrators Appointed) [2025] NSWCA 161
² Ibid at para [50].
³ Ibid at para [37].
⁴ Ibid at para [36].